Partner equity
The portion of the assets that the partners own.
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Partnership
An unincorporated business with more than one owner.
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Partnership agreement
An agreement among partners that spells out how they shall treat themselves from an organizational, tax, and legal point of view.
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Pass-through entity
Business entities that pass-through the taxable income or losses directly to their owners, i.e, sole proprietorship, partnership, S-Corporation, Limited Liability Company.
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Percent
One part in a 100. A percentage of a number is found by dividing it by the base figure. If the question is what percentage is 36 to 72, then 72 is the base and the divisor. 36 divided by 72 = 50 or 50%.
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Period
See Accounting period.
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Permanent account
A balance sheet account. Referred to as permanent because the account is not closed at the end of the year.
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Perpetual inventory
A method of keeping track of each item of inventory, added when it is purchased and deducted when it is sold. Cost of goods sold is the total amount of deductions from inventory in an accounting period.
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Physical inventory
The amount of inventory determined to be on hand after a physical count.
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Plant assets
A way of referring to all tangible non-current assets except land.
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Posting
Recording transactions from subsidiary journals to the general ledger.
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Practicality
One of the two primary characteristics of accounting information that make financial statements useful. For a financial statement of have practical value means that the information contained in them must be relevant.
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Predictable
One of the three criteria of "Practicality" which is one of the two primary characteristics of accounting information. By being able to use the information in financial statements to forecast or predict future events, management can make decisions that effect the well-being of the company.
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Preferred stock
Stock that is deemed to have privileges not associated with common stock, such as, special dividends and claims on assets if liquidated.
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Prepaid expense
An intangible asset usually associated with a prepayment for service not yet rendered. As the services are rendered, that portion of the asset is expensed.
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Primary financial statements
The balance sheet, statement of income & expense and the statement of cash flow.
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Principal
1) In relation to a loan, it is the actual amount borrowed on which interest is figured. 2) It also refers to one who holds high rank in an organization.
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Prior period adjustment
A journal entry made directly to retained earnings to correct a mistake or error made in a prior period that was previously closed to retained earnings.
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Product
Any tangible goods or intangible services produced by an entity.
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Professional Service Corporation
A corporation that performs services in the fields of health, law, engineering, architecture, accounting, actuarial science, performing arts, and consulting.
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Profit
Income
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Profit margin percentage
Net income expressed as a percentage of net sales revenue.
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Promissory note
A written document that lays out the terms of an agreement between a lender and a borrower. See Note Payable or Note Receivable.
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Proprietorship
Sole Proprietorship
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